Oil prices remain flat on concerns over crude oversupply

Global oil prices were almost flat on Monday on lingering worries over crude oversupply despite OPEC cuts and softer fuel demand growth in 2024.

Brent crude futures dipped 6 cents to $75.78 a barrel by 1427 GMT. US West Texas Intermediate crude futures were down 7 cents at $71.16. 

On Friday, both the contracts had jumped more than 2%. 

US crude oil benchmark for January delivery rose $1.89 to $71.23 per barrel. Brent crude for February delivery rose $1.79 to $75.84 per barrel on Friday.

The OPEC+ (Organization of the Petroleum Exporting Countries) and its allies including Russia have pledged to cut 2.2 million barrels per day (bpd) of crude oil production in the first quarter of next year.

But output growth in non-OPEC countries is expected to lead to excess supply next year. 

In the week ahead, investors will keenly watch for guidance on interest rate policies from meetings at five central banks, including the US Federal Reserve and the European Central Bank (ECB).

The oil prices are expected to get some support from the demand from the United States, which has sought up to 3 million barrels of crude for the Strategic Petroleum Reserve (SPR) in March 2024. 

Economic data from China, the world’s biggest oil importer, also pressured the oil prices.

China’s latest consumer price index (CPI) data showed rising deflationary pressures as weak domestic demand cast doubt over the country’s economic recovery.

On Friday, China pledged to spur domestic demand and consolidate and enhance the economic recovery in 2024. 

In the global stock markets, the US equities were mixed, with the Dow Jones edging higher and the Nasdaq nominally lower and the S&P 500 unchanged. 

The European shares were slightly higher, with the pan-European STOXX 600 index rising 0.29%. 

The MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.29% lower.

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Published: 11 Dec 2023, 11:06 PM IST

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